Little Monsters

If you’ve read William O’Neil’s famous (and excellent) books, you know that he studies the greatest stock winners of all time. He has charts going back decades showing big winners on stocks we’ve never heard of. (It’s crazy to see 1,000%+ winners on stocks that no longer exist.) Yet he comes to an interesting conclusion after studying all these massive success stories. It’s okay to take 20-25% winners. That’s correct. He documents 10,000% monsters but advises taking 25%. Why? Two main reasons. One, it’s easier to get a 25% winner than it is to hold a stock for many years -- and dealing with the horrifying drawdowns that go along with it. He knows one stomach-turning roller coaster ride can make someone quit the game -- and you don’t make life-changing money if you quit. Two, he knows that compounding small wins on top of each other can lead to incredible account gains. For example, let’s say we have $10,000 to invest and we make a “tiny” 25% gain. Now we have $12,500. Let’s say we get another 25% winner. Now we have $15,625. And let’s say the market is favorable and we get another quick 25% winner. With those three quick trades, our hypothetical account is now up to $19,531 if we used the whole account size each time. If we stayed in just one trade, looking for a Monster Winner, that one trade would have to be a 95% gain to match our compounded little 25% winners. This is why O’Neil recommends taking smaller gains. It’s a manageable way to make an account grow. Of course, there’s nothing wrong with huge winning trades. If they come along, we’ll take them! But sometimes a string of small winners can simulate (or be superior to) one big Winner. And the more ways we have to grow our accounts, the better. Happy trading, Scott P.S.: Tonight at 7 PM EST, Rob Booker is going LIVE with his former trading student, turned market mastermind Jeffry Turnmire for Echo Trades Q&A. [Click here to save your spot.]( Clicking this link registers you automatically for the event, and for periodic updates from Daily Profit Publishing ([privacy policy]( Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors. We advise you to carefully consider whether trading is appropriate for you based on your personal circumstances. You may lose more than you invest. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. The information on this website is intended as educational in nature and we do not recommend that you buy or sell any specific financial instrument.   Daily Profit Publishing , 1800 Hughes Landing Blvd. Ste. 200, The Woodlands, TX 77380, United States [Update your subscription]( — [Unsubscribe](